Greetings on 27 January 2020, Monday:
The corona virus news, obviously, has the DJIA down over 400 points this morning, the S&P500 correspondingly down almost 50 points near 3240.
What happens with the virus is unpredictable at this time. The sars virus (2009) was very different in that symptoms were displayed during the contagious stages. With the present corona virus – the incubation period is believed to be 10 to 14 days and an infected person does NOT display symptoms during that period. This makes projecting any spread difficult to impossible (for now.)
With stocks and commodities up recently and the unknown aspects of this virus, there are considerable risks in my current crude oil and corn positions.
I exited my April 2020 Crude Oil: 70C/45P short strangle this morning at .56. I had sold it for .22, so the loss is $340 on this trade.
I exited my May 2020 Corn 370 Put at 5.125 this morning. I had sold those for 4.0, so the loss is 1.125 or $56.25 per option.
Often futures markets as the stock market— will over-react then bounce back. With the still unknown aspects of this corona virus, and drug companies not expecting any vaccines for at least one to three months (up to a year on the longer estimates.)
Since I only have these two positions, I’m out of both trades for now and will wait and see what happens. There is the possibility that it could be many days or even weeks before we know things for sure. The news cycles, as with politics, could drive the public into over reactions and massive selloffs of equities, given the very high prices in the market and the long bull run.
I not predicting that things will get that much worse. I am only saying that I am ‘aside’ for now and will wait and see before entering more trades. As more facts come to light, decisions can better be made. Too much unknown for me right now.
Gold is close to $1600/ounce this morning, Crude Oil down .91 at mid-morning near $53.28, and MAY20 Corn futures down 7.25 at $3.80 per bushel.
I of course, wish I had better news.
I’ll post more here as information is available – and send out a notification email when I do.
To be clear: I don not have any open positions as of this morning.
Don A. Singletary
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